D. CRUPI & SONS LIMITED v. TRAVELERS GUARANTEE COMPANY OF CANADA 2013 ONSC 465

COURT FILE NO. CV-10-412444
MOTION HEARD: JANUARY 18, 2013

Fernando Souza for the moving party/plaintiff
Max Shafir Q.C. for the responding party/defendant B. Gottardo Construction Ltd.

ENDORSEMENT

[1]. The plaintiff brings this motion pursuant to Rule 34.15 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”) for an order requiring that the defendant B. Gottardo Construction Ltd. (“Gottardo”) answer its undertakings and certain questions it refused to answer on its representative’s examination for discovery held July 29, 2011. A number of the issues on this motion were resolved prior to argument, but several refused questions remained in dispute.

BACKGROUND

[2]. The plaintiff’s claim arises out of an agreement entered into between the plaintiff and Gottardo dated May 16, 2006 (the “Agreement”). Pursuant to the Agreement, the plaintiff was to provide paving services in relation to a project located in the Regional Municipality of York and which can be described in general terms as the Reconstruction of Teston Road (the “Project”). Gottardo was the contractor for the Project pursuant to a contract it had previously entered into with the defendant The Regional Municipality of York (“York”) as the owner of the Project. It appears that as part of its obligations under its contract with York, Gottardo had provided a Labour and Material Payment Bond (the “Bond”) issued by St. Paul Guarantee Insurance Company (now the defendant Travelers Guarantee Company of Canada). The plaintiff commenced this action on October 15, 2010 seeking payment pursuant to the Agreement and the Bond.

ANALYSIS

[3]. In determining the issues on this motion I have applied the relevance test set out in Rules 30.02 and 31.06. I am also mindful of the proportionality considerations set out in Rule 29.2.03. The general principles regarding the scope of discovery are set out in Ontario v. Rothmans Inc., 2011 ONSC 2504. In particular, I rely on Justice Perell’s observation at paragraph 129 of that decision that “[t]he scope of the discovery is defined by the pleadings; discovery questions must be relevant to the issues as defined by the pleadings”.

[4]. The disputed questions all relate in some fashion to requests by the plaintiff for documents and information from Gottardo regarding certain bonuses Gottardo appears to have received from York in connection with work done by the plaintiff. In its statement of defence, Gottardo takes the position that it is entitled to pass along to the plaintiff, by way of a back charge, certain penalties levied against Gottardo by York. The penalties in question relate to the asphalt/cement mix supplied to the Project by the plaintiff and whether the mix met the minimum requirements specified by York and its consultants. In its reply, the plaintiff responded to Gottardo’s position on this issue, in part, by claiming that it was entitled to a credit for certain bonuses that York had paid to Gottardo for work done by the plaintiff within the scope of the Agreement. No mention was made of the plaintiff’s entitlement to such bonuses in the statement of claim itself. In fact, the specific amount claimed in the plaintiff’s prayer for relief ($494,260.56) simply included the amount of the plaintiff’s unpaid invoices and holdback. It did not include any amount allegedly owing to the plaintiff for bonuses.

[5]. Nevertheless, it is my view that the disputed questions should be answered. The bonus issue is clearly raised in the pleadings. The plaintiff makes specific reference to the issue in paragraphs 3 and 10 of the plaintiff’s reply. The scope of discovery, including the relevance of any particular question, is determined by reference to the pleadings.

[6]. Mr Shafir argued that the bonus issue was really a new claim. It was not mentioned at all in the statement of claim and the value of the bonus claim was not included in the amount of damages sought by the plaintiff in its prayer for relief. Moreover, no mention of bonuses is found in the Agreement. Gottardo argued that this is a new claim and is therefore not properly pleaded. It should have been part of the statement of claim and not the reply. Rule 25.06(5) provides that an allegation that raises a new ground of claim shall not be made in a subsequent pleading but rather by way of an amendment to the previous pleading. Gottardo therefore takes the position that it will not answer any questions relevant to the bonus issue simply because that portion of the plaintiff’s claim has not been properly pleaded in accordance with the Rules.

[7]. The difficulty I have with this argument is that Gottardo has done nothing to challenge the plaintiff’s reply in any fashion. No motion to strike the allegedly offending paragraphs has been brought. There is no evidence that Gottardo advised the plaintiff of its objections to the pleading before its representative was examined. The bonus allegations were part of the pleadings when Gottardo was examined and they remain part of the pleadings today. In my view, the question of whether the bonus issue is properly pleaded is not one that should be addressed on a motion of this nature. If Gottardo takes issue with the plaintiff’s reply it should have raised the issue with the plaintiff before it was discovered and brought the appropriate motion. Finally, the question of whether the plaintiff is entitled to the bonuses is one for the trial judge to decide and not a question to be decided on this motion.

CONCLUSION

[8]. For these reasons I have concluded that the disputed questions are relevant based on the pleadings as they existed at the time of the Gottardo discovery. Gottardo shall answer questions 27, 102, 118, 128 and 131 within 60 days. These questions shall be answered only insofar as they relate to bonuses paid by York to Gottardo, or owing by York to Gottardo, in respect of work within the scope of the Agreement. Gottardo need not provide the consent requested at question 110 as its counsel has advised the court that it will not oppose a motion by the plaintiff under Rule 30.10 for an order that the non-party URS Canada Inc. (the owner’s consulting engineers) produce the documents requested in that question.

[9]. If the parties are unable to agree on the issue of costs, they may make brief written submissions by no later than January 25, 2013.

January 21, 2013

Master R.A. Muir